Alten S.A.

Ladies and gentlemen, welcome to our Alton results presentation for the fourth quarter of 2021. During this call, you will be on listen-only mode. However, you will be invited to ask questions at the end of the presentation. You can do this by pressing star 1 on your handset, and then you can record your question. I'd now like to give the floor to Bruno Bellodi, Deputy Chief Executive Officer, to kick off our conference this evening. thank you good evening everyone this conference is my first opportunity to wish you all a happy new year 2022 hoping that we can move on from the covid pandemic and that we can get back to business and life as usual the geopolitical and economic circumstances rates economic recovery are all factors that affect affect 2022 as it starts There's likely to be more randomness and unexpectedness than in the previous year. Speaking of the previous year, at the beginning of 2021, we wouldn't have bet on an improvement of the public health situation that would be as fast as we've seen. And we definitely wouldn't have bet on such a strong recovery. However, we have almost moved past pre-COVID levels and excluding new acquisitions. Alton, at the end of 2021, is back to the business levels that it had at the end of 2019. and that was not an easy thing to achieve. Business boomed in the third quarter and that trend continued into the fourth quarter despite a base effect that was less positive given the fact that business had started to recover after two strong negative quarters. In automotive and civil aerospace engineering, Business remains lower than pre-COVID periods, even though business did start off faster and earlier than we had expected in those two sectors. In all other sectors, as we'll be showing you later, we have gone beyond business levels from 2019. We are therefore at 2.224 billion euros at the end of the year, up 24.9% versus December 2019. In France, business is up 13.7% and 32.9% internationally. Like for like, business is up strongly 12.9%, up 8.4% in France and 15.7% outside of France. Acquisitions contributed to half of overall growth this year and about 10% of revenue. International regions represent now 65% of overall turnover. The data from the fourth quarter especially are as follows. Business is up 40.1%, 26.4% in France and 48.5% outside of France. Organic growth this quarter is at 22.3%, 17% in France and 23% abroad. Businesses remained strong, 82.7% in the fourth quarter, after 82.9% in the third quarter, the previous one. In the second quarter, 92.8% and 91.5% for the entire year. The first quarter having borne the brunt of the public health crisis. In the second half, growth beyond average group-wide, which, as you know, is 92 to 92.3%, but is still slightly lower than that rate for the rest of the year. Headcount for the group. Headcount is up 8,500 people in 2021. 7,750 of them are engineers. Therefore, we now have 42,300 people on our roster at the end of the year. And as a reminder, we had 33,800 one year ago and 38,500, 33,000 of which were engineers at the end of June 2021. Taking into account acquisitions, at the end of 2021 that were announced during the previous press release i.e. an Indian company with a small front office in the US and a Chinese company with business in the US as well with the addition of those two companies consolidated dated the 1st of January on the P&L of the group by including those two acquisitions on the 1st of January 2022 We had 45,500 people, 40,000 of which were engineers. Engineer headcount has continued to increase in the final quarter at a similar trend and rate as the previous quarters, about 1,400. Excluding acquisitions and divestments, our engineer headcount would be at some 33,000. with a sequential increase between the Decembers of 2021 and 2022 of some 4,500 people, almost 5,400 or so in France and 4,500 or so abroad. Broken down by region, the business is as follows. In France, all sectors are up with the exception of the automotive industry, which is still down versus 2020. damaged by the car manufacturers. France is still 15% below pre-COVID business levels. Aerospace has ramped up in the last quarter, even if activity is still 13% lower. Remember that we were at minus 45% in the aerospace industry in France one year ago. The driving sectors are still energy, 16%, pharma, 10%, rail and naval, 10%, defense and security, 7%, with a 10% growth or more on all of these sectors. Internationally, business is also growing strongly in most of our regions. Only Scandinavia and one other where civil aerospace engineering and rail are still below their pre-crisis levels. In North America, in the US, accounting of 80% of the North America region. Business is up 14% roughly, has achieved pre-COVID levels, including in the automotive industry, accounting for 20% of overall revenue in the region, despite the drop-off, less pronounced drop-off, but drop-off nonetheless of oil and gas, which happened this year. In Canada, about 20% of the North America region, growth is at 34%, thanks to the tertiary finance sector, which accounts for about half of local revenue, Telecom, 17% of local revenue, and Life Sciences, 10% of local revenue. In Germany, the economic recovery has ramped up throughout the year, especially in the final quarter of the year at plus 32%, as you can see on the documents that were handed out. You've probably already downloaded them, and this is mainly due to aeronautics and automotive affected heavily by the crisis, but they reinvested heavily at the end of the year. Organic growth is therefore at 8% for the year, but still about 10% lower than the pre-COVID situation. Aeronautics, 18% of revenue is down 35% still, whereas automotive industry, 46% of revenue is only 8% behind its pre-COVID level. The diversification sectors, tertiary finance, 10% of revenue now in Germany, industry 7% are up as well. In Spain, business is up 9%, the rhythm of the recovery accelerated in the second half, and we are now well beyond the pre-COVID level. All sectors are up in Spain, especially defence, security, energy, other industries and aerospace. In Italy, growth is holding strong at 30%, even though business grew 12% during the crisis in 2021. All sectors are up, with the strongest progress being in automotive. 50% growth for the Italian account, which unfortunately is not the same as what we have in France. 20% of overall revenue comes from cars. 37% growth in Italy on defense and security. and 75% growth in other industries. For Asia Pacific, the rate of growth continued to accelerate to 31%. The zone that had growth in 2021 despite the crisis, 6.5%, is up around 40% versus its pre-crisis level. India, which represents 30% of our APAC region, China, 20% of the APAC region, are both up around 20%, driven by the automotive industry. Japan, 15% of the region, is also in 45% positive growth, thanks to strong penetration of the third tertiary sector in finance. Scandinavia, Business is very slightly up, with the growth rhythm having paradoxically slowed down in the final quarter. Finland, representing 22% of Scandinavia, is up 6% only, thanks to goods and industrial equipment, which accounts for three quarters of the local activity. In Sweden, we're at only minus 0.5%, but recovery is visible in all sectors. They suffered from the HGV automotive industry and accounted for 40% of local revenue. As a reminder, that dropped off 23% in 2020 and so is still 22% below pre-COVID levels. In Benelux, growth also ramped up 16% in the final quarter. with business up 10% over 2021. Belgium had growth of 7%, excluding the tertiary sector, which is slightly down. All of the important sectors are up, including pharmacy, which accounts for more than 41% of revenue in Belgium locally. It's up 20%. In the Netherlands, business is strong, 12.5% total growth over the year, thanks to electronics and semiconductors, which are a solid third of the business in the Netherlands. In the UK, activity is strongly up. As you can see, we're at 26%. We are 15% above the pre-crisis levels, and that happened in 2021. And recovery has been strong in the automotive industry, even if we are still slightly below our end of 2019 results. And the aeronautics business is well above the pre-COVID levels. Switzerland was not heavily affected by the crisis and is now at 24%. in Q4 and 12% over the year, thanks to pharmacy and tertiary and finance. And Eastern Europe had solid growth, especially thanks to Poland, representing 60% of the region with 65% growth, thanks to auto and tertiary finance. Romania grew 15% thanks to growth in the same businesses as Eastern Europe. So the recovery that we observed in the second quarter continued to ramp up in the third quarter and was confirmed further in the fourth quarter. All of our business lines have now overtaken pre-COVID with the exception of HGV, automotive and civilian aerospace, although they're also exhibiting recovery. Let's look at automotive. If we break it down per sector, Automotive industry, 16.2% of overall revenue for Alton. A business that was bouncing back in the second quarter, confirmed in the third and fourth quarters of this year, of the past year rather. Up 8.3%, but still 12% below pre-COVID levels for the entire group. As I'm sure you've understood, the recovery has been uneven depending on the region. And if we look on a per-client base, for the OEMs, there are ups and downs to Lantis France, JLR, Daimler and Renault are still down, whereas most of the OEMs in Germany, in China and the US are strongly up. Overall, OEMs accounting for 66% of the automotive industry are stable, with some good players offsetting the other ones. And the original equipment manufacturers are up 30%. Aeronautics up 11.5%. And the growth has mainly been from the naval side of things with a strong boom with the naval group contract. 10% above pre-COVID levels there. Aerospace, 11.6% of overall revenue is up 17%. Aerospace only accounts for 2.2% of revenue, but the recovery has been much stronger than expected, with growth above 20%. Civilian aeronautical engineering, the recovery that we saw in the third quarter of last year, was confirmed in the fourth quarter, happened earlier and stronger than we expected. our growth in the civilian aeronautics sector was pushing into the 100% range at the end of the quarter, a recovery that is as strong as it was unexpected. Over the year, we've therefore got growth of 16%, which significantly offset the never-before-seen drop-off that we observed in 2020 with that minus 45, you may remember. We're not yet back to pre-COVID levels, but we're not far, if you'll allow me saying it, because aerospace is now only 13% below its pre-COVID levels. Defence and security, 5% of overall revenue, grew 20% and have also overtaken pre-COVID levels. Energy, 11% of revenue almost, is up 9.1%. slightly above its pre-COVID levels at this point, but depending on the subset you look at, the situation can be different. Oil and gas, 4.8% of overall revenue is slightly up, slightly higher than 1%, although demand is increasing, prices are increasing, and there's been underinvestment in that sector for a number of years, which should lead to a strong bounce back if logic applies. Nuclear, 2.7% of revenue, continues to grow 10%. As you know, we have a very strong trend behind us in that. Equipment for energy, 2.7% of revenue, a strong increase in the growth rate there, now beyond 25%, especially thanks to investment made in equipment for renewables. Life sciences, 9.5%, with 10%. Solid growth of 15% thanks to the pharmacy sector, whereas the medical equipment sector is growing but more sluggishly. Other industries, OEMs, transformation, 6% of overall revenue. They are up 22% this year, now significantly higher than the end of 2019. Telecom, 5.6% of revenue, slightly up about 3%. overall solid situation for telecom operator around 4% and a growth of 10% for the equipment manufacturers. Our business is almost back to where it was before COVID, but telecom is maybe the only sector where recovery has been disappointing.

In the electronics sector, we have semiconductors representing 16%. mainly due to strong activity in the semis. And finally, tertiary finance, which is approximately 25% of sales. And this is a business that's picking up in banking and insurance. We have now gone well beyond our pre-pandemic level. And all sectors have gone back to a level well above that of the pre-crisis. There's still a catch-up potential in the two remaining sectors, which are still below end 2019, which augurs wealth of potential growth in 2022, 2023 and the following years. Looking at acquisitions, we had announced at the last publication of results the six acquisitions in France and overseas in 2021. I won't dwell on it. In 2022, we have acquired a company in Spain in IT services. on the cloud business and digital transformation. This is a company which in 2021 should post revenues of 12 million euros and profitability of approximately 8%.

So 2022 looks promising.